WalshStreet Blog

California Real Estate, A Game of Musical Chairs

April 28th, 2014 10:03 PM

Los Angeles home values are rising and that’s great news, but let us not forget our lessons from the bubble! The bubble showed us that atypical circumstances that occur in the real estate marketplace, can lead to fake value! Current atypical conditions include the fact than the economy has only grown by less than one percent in the past year but real estate prices have gotten back to pre recession prices, a 26% - 29% price increase – and the music continues to play! Now as we head into the spring/summer (high) season, demand will go up and I suspect so will prices, as long as interest rates remain low. After seeing a spike in sales prices this time last year, in August, a month that traditionally has the strongest real estate activity and appreciation, rates inched up slightly and the music stopped. The bubble didn’t burst, it got soft! The music has started again and the rotation around the empty chairs will continue until the music stops – rates go up noticeably! Those left sitting in a chair (home) will have bubble face!